Sterling Cellular plans Rs 500 cr core bonds with Rs 100 cr greenshoe option
Raghu Mohan
Mumbai, Jan 20: Sterling Cellular, the cellular services operator for Delhi, will tap the market shortly with a Rs 500-crore infrastructure bond issue that has a greenshoe option of Rs 100 crore. Three types of bonds will be offered through the private placement route, bearing coupon rates of 9.75 per cent, 10.25 per cent and 10.50 per cent. Infrastructure bonds are tax-free.The Ruias of Essar, who own Sterling Cellular, are in talks with financial institutions as well a few foreign investment banks like the Union Bank of Switzerland (UBS) to stand guarantor for the issue. India Securities will be the lead arranger, while MCS Ltd (Chennai) will be the registrars. The offer document has been circulated to the financial intermediaries. Sterling Cellular will make an offer for three kinds of bonds: Series A, B and C, all with a face value of Rs 5 lakh. Series A will offer a coupon rate of 9.75 per cent, payable semi-annually. These bonds are to be redeemed through a bullet payment at the end of five years andone month from the date of allotment at par. Series B will carry a coupon rate of 10.25 per cent, payable semi-annually, with a full tenure of seven years. The debentures are to be redeemed at par in three installments at the end of three, six and seven years. The proportion of redemption will be 35 per cent each at the end of the fifth and sixth year, while the remaining 30 per cent will be redeemed after seven years. Series C will carry a coupon rate of 10.50 per cent, payable semi-annually, and will have a maturity of eight years. The debentures will be redeemed at par in three installments at the end of the sixth, seventh and eight year from the deemed date of allotment. Thirty five per cent each of Series C will be redeemed after the sixth and seventh year, while 30 per cent will be redeemed after the eighth year. The issue proceeds will go towards financing cellular services in Delhi, and setting up similar services in the circles of Haryana, Uttar Pradesh (East) and Rajasthan through Aircell
Digilink, another Essar concern. Institutional sources said Crisil's rating for Sterling Cellular's upcoming bonds issue will be made available to them shortly. Sterling Cellular is scouting for a guarantor to enhance the Crisil rating -- whatever it might be. Sterling Cellular's Delhi operations and Aircell Digilink's Haryana, UP (East) and Rajasthan operations have been appraised by the Industrial Development Bank of India and the Industrial Credit and Investment Corporation of India. The total project cost of Sterling Cellular (including Aircell Digilink) is Rs 1,566.8 crore, which includes licence fees payable upto the fourth year. The company has already mandated Credit Lyonnais and ANZ Investment Bank (ANZIB) to secure a $230 million foreign currency bank loan. UBS is the financial advisor for the project. At September-end 1997, Sterling Cellular claimed a subscriber base of 1,93,000 in Delhi. It has a marketshare of nearly 45 per cent. The cellular services operator was in talks with Swiss
PTT -- the 32 per cent partner in the venture -- for allowing the Swiss company to raise its stake to a possible 49 per cent stake in the company. Initial reports say that SwissCom, the parent company of Swiss PTT, has sought time before going ahead and increasing its stake.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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